Pandora Direct Licensing Agreements FAQs

Last year, as part of its expanded suite of services, Pandora entered into direct licenses covering all three tiers of its offerings. SoundExchange is working with rights owners and Pandora to continue to administer and pay artists’ royalties for the ad-supported tier of the Pandora service. Our first distribution of royalties under these agreements was made in December 2016.

FAQs

What changed?

Unlike before, when Pandora relied on the statutory license administered by SoundExchange, Pandora has obtained direct licenses for its service.

When labels enter into direct agreements, as they have done with on-demand audio services like Spotify, they generally administer the licenses and make royalty payments to their artists themselves. In this case, however, Pandora and the labels have selected SoundExchange to administer and pay royalties for artist shares on the ad supported tier of service.

For all other Pandora offerings, including the subscription service and the new Pandora Premium service, the artists will be paid anything they are owed by their labels and not by SoundExchange.

What are the new Pandora services?

Pandora’s service now includes three tiers.

Tier 1 is Pandora’s free, ad-supported tier. Consumers can listen to content with more skips and rewinds if they watch video ads.

Tier 2 is called Pandora Plus, and it is a subscription-based service formerly known as Pandora One. In addition to rebranding the service, Pandora Plus includes new features, including unlimited skips, rewinds and caching (if consumers are out of range of their mobile service, they will still be able to listen).

Pandora plans to launch Tier 3 in 2017, called Pandora Premium. It will cost $9.99/month and will be a fully interactive service. That means consumers can listen to exactly what they want to hear at the exact moment they want to listen to it.

What does this mean for artists?

In most cases, SoundExchange will continue to pay royalties to artists for tier one. There will be no interruption in our service level or support. Artists should look to their labels for royalty payments for the subscription services and the new on-demand services offered by Pandora (tiers 2 and 3).

Will my SoundExchange featured artist payments change?

Currently, the majority of revenue generated by Pandora comes from the ad-supported service. However, a portion of Pandora revenue has historically come from its subscription offering. Because the subscription royalties will now be administered and paid to artists by labels and NOT SoundExchange, the amount paid by SoundExchange to artists may be reduced by the royalties associated with the subscription offering. And as before, other factors, including how often your sound recordings are played on the ad-supported Pandora tier each month as well as Pandora’s overall performance, will also have an impact on your payments.

What does this mean for labels?

If a label has executed a direct agreement with Pandora, its shares will be paid directly to the label by Pandora, not SoundExchange. If a label is distributed by another label or other distribution company, and that distributor has licensed the relevant rights for that label, all of the Pandora royalties that have historically been paid to it by SoundExchange may now flow through the distributor instead. If a label has any questions about whether its content has been licensed by Pandora, it should contact Pandora.

Who should I contact with questions about Pandora’s subscription tiers?

If you are an artist, you should contact either your label or Pandora. Pandora has an email address for artist questions (artist-support@pandora.com). If you are a label, you should contact Pandora.